tv Bloomberg Best Bloomberg July 30, 2016 12:00pm-1:01pm EDT
♪ erik: coming up on "bloomberg best," the business stories that shaped business around the world. yahoo! sale finally goes forward while european banks reverse a downward trend. >> the sentiment is really bad, valuation is really bad. and the results are really bad. >> we have been very consistent in saying we do not need to risk capital. erik: the fed continues running in place while japan takes more steps down the stimulus path. >> they had to do something. they did the bare minimum. erik: from tech to pharma to autos to oil, earning reports come fast and furious. a we have definitely seeing
very strong tailwind effect from currency. >> we are also seeing the effects of brexit. >> the world is a volatile place and that is just a reality. erik: and big-name guests help us track name news in global politics and policy. >> the democratic party is trying to reach out broadly to americans. >> we have been seeing since the beginning of the year, a significant pickup in the rate of money supply growth. erik: it is all straight ahead on "bloomberg best." ♪ erik: hello and welcome. i am erik schatzker. this is "bloomberg best." your weekly review of the most important business news, analysis, and interviews from bloomberg television around the world. let's start with a day by day look at the top headlines.
for almost two years, yahoo! has been under pressure to separate its core business from its investments in asian tech companies. on monday, the big announcement finally came. >> it is official. verizon is buying yahoo!'s operating business for $4.8 billion in cash. this is like the merger we knew that was going to happen for like seven months. it is finally happened. >> there is a non-core a.p. component of yahoo! that will remain within the yahoo! holding company for the time being that will be sold off, but probably not for another month or so. of course yahoo! will maintain its stake in yahoo! japan and alibaba. yahoo! will have to decide on what it does with those at a later date. jonathan: actually identify the assets that verizon has. >> yahoo! gives a skill that takes us out of the millions and into the billions.
combining those two is the right start for us. we also have been investing in content assets across verizon. so you have seen us go into licensing linear content and into ownership. >> you say you plan to stay. what role do you envision for yourself? >> two priorities -- seeing this transaction through to close but also watching the value of our stakesssets and equity we have there. moving forward, we will figure it out. but i love yahoo!. it is very important to me to see its next chapter. emily so you came here with some : of possibilities, so much help. you wanted to restore yahoo! to greatness and build out news and original content. how do you personally feel about this outcome? >> i feel very good about it. i think yahoo! is a company that changed the world. not many companies get to shane's the world. -- change the world.
>> apple shares gaining in after hours trading with a slowdown that was not quite as bad as expected. third-quarter revenue fell 13% marking the first back-to-back quarterly sales declined since 2002. but actual iphone unit sales beat analysts' estimates. averagea $39.9 million estimate. the coming quarter looks quite good which means they think that last quarter was the low point. >> it seems like it. there are some highlights. they are talking about pockets of opportunity in china and that is obviously a strong point because that market, as a whole, is flat. they are finding that opportunities. they highlighted some initial penetration into india which has not been the easiest thing because of the legal issues they have had to hurdle. it is a new product line for them and is cheaper and finding new opportunities and new audiences as well.
scarlet we are minutes away from : the july decision with the reserve is expected to leave interest rates unchanged. michael: no mention of economic activity overseas or the dollar, and certainly no timeframe for future action. but if you are feeling hawkish, inserted into the second paragraph, a statement noting that near-term risk to the economic outlook have diminished. that suggest that members may -- -- members may feel conditions for a rate rise have grown more favorable and september could be a live meeting. tom: it is a pretty good america and yet she is central banker for this world. what would be your counsel to her for september and into next year? >> janet yellen, not to be critical, but you're asking me,
so i will be -- as well as all central bankers, are fixated that the lower and lower interest rates go the higher , assets go. janet, get off of this fixation of lower interest rates providing a push for economic growth. francine: deutsche bank says second-quarter profit was almost wiped out. and deutscheed bank set aside money to contract. the ceo has been cutting risk assets and eliminating 9000 jobs. >> the sentiment is really bad and the results are really bad. we were expecting some pain because this is a restructuring. there is some turnaround. you see market sacrificed. the rewards in terms of capital and balance sheet strength just are not there. these idea that 2016 will be the
peak year and everything will be fine, it is not convincing right now. francine: how much time does john cryan have to turn it around before he steps down? >> a good question. management things they can do it on their own steam. for the next two to three years, they will generate capital on its own without emergency measures to hit its target. deutsche bank is too big and important to say, we will keep going and it will take two years. i think shareholders may put pressure on him to act sooner. mark: three big banks today out with better estimated earnings. what was the reaction? shares of bnp paribas credit , suisse, lloyds, all falling after announcing cost cuts and struggled to boost revenue. why did the shares decline? >> it was a tale of lowered expectations. they beat slightly against those lowered expectations but certainly there are still issues
across the board. lloyds, still under 10%. mark: let's get back to credit suisse. it was an unexpected profit. is the tijane thiam turnaround bearing fruit? >> on one side of the ledger, he is definitely starting to make some progress. he talked about it being a first step. on the revenue side, it is a tough picture. francine: do these profits and results mean we don't need to raise capital? can those rumors be laid to rest? >> we have been very consistent in saying we do not need to raise capital. we have been very clear. we have raised $6 billion. we have the highest ct one ratio we have ever had at 11.1%. we have showed that we can pull many levers to drive that forward. we said we could do a billion and disposals. look, you never want to --
[indiscernible] within a reasonable range of outcomes, we are in a perfectly comfortable position. mark: the bank of japan keeping key monetary talks unchanged. i think if there was a surprise for anyone it is going to be this review. what did you take away as far as the review is concerned? >> the review makes sense. they are closing in on 40% of the bond market owned by the boj and moving toward 50 and 60 on the current plans. it has not worked so far. >> when you take a look at what the boj did we are used to them surprising on the upside and this is a surprise to the downside. >> the steps they took were pretty minimal. they had to do something. they did the bare minimum. the real dark horse is the comprehensive policy review that governor kuroda has to start
looking at in there september policy meeting. we are really in a crossroads here. does he let the government take the wheel for a while or does he double down and hit the gas pedal even more? >> what do we expect to hear from shinzo abe about potential stimulus after the boj non-move. >> the key thing to look for from the prime minister is what is it actual amount of new spending? some of the figures that came out this week where massive and they likely include foreign projections, loan guarantees, and things like that. we don't know the size of the supplementary spending for 2016, and that is the key when we talk about stimulus. erik: still ahead on "bloomberg best," even more earning analysis. we look at tech giants like facebook and what the slump in crude means for oil companies. and up next, more of the weeks top business stories including
erik: welcome back to "bloomberg best." i'm erik schatzker. let's continue our global tour of the week's top business stories would be ouster of ericsson's ceo. last week, he assured us that he had no plans to leave the phone equipment company despite mounting pressures. as it turns out, the board had other plans. mark: big changes at ericsson today. shares of the swedish telecom equipment giant up on the news that hans vesper has been ousted. he had been chief executive under years and came under
-- scrutiny and probes. the company's profits and revenue have taken a hit in the face of stiff competition. how much of a shock is this? vestburg has been under recent pressure. >> he has. the timing might be awkward because last week, they promised to double down on cost cuts. the truth is, he has been under pressure for months, and increasingly, the company failed to deliver on profits and sales over the last four quarters. >> nintendo shares are following falling by the most since 1990 today. the hope that pokemon go would revitalize the stock are disappearing as investors realize the company has limited stake in the game. how much shock should be this -- how much shock should this be to investors? >> nintendo said it was no
secret that it only had a 13% economic interest in pokemon go. and that investors should have known this all along. they got concerned about whether -- about the way their stock had gone up since the release of that game. it has more than doubled since the release of the game. they wanted to deflate some of the hype, so they put out a statement on friday reiterating the fact that they only have a 13% economic interest in pokemon go through various other companies. scarlett what is interesting is : company will be reporting earnings soon. why did they not wait until the formal earnings report to clarify anything? >> they were very concerned about the run-up in the stock and there may have been concerns about potential action from shareholders in the u.s. maybe. sabnbev raises its bid for miller. shareholders will be entitled to receive more shares than the previous offer.
the shareholders pushed bidders. it is it the last call? >> it certainly should be the last call. said inthat is what abm their statement today. from what we have seen so far is that they are not considering the offer. who knows what they will say. the proposed the last share offer. scarlett: sab miller has halted its takeover bid for sab inbev -- ab inbev. shareholders were looking for more value following the brexit plunge in the pound. they favored that they -- they said they favored anheuser-busch. this is according to people familiar with the process. >> we have to be very careful. they have not halted the merger. they want to stop integration discussion. they want to stop the ongoing process of trying to put these two countries together. there is good reason for that. they have a new offer. it was bumped up by one pound. they are in receipt of that offer. until they accept that offer or
reject it it will be improper , for them to continue the process. it is not as severe as it sounds basically. it is just them saying, if we continue to integrate that, we accept the offer. if we say no, people will read it like we are knocking everything off. it is a way of them thinking of putting things down as they decide. >> the biggest deal ever involving beer makers is moving toward conclusion. recommends that ab nbev takeover -- chairman and founder has big ambitions saying he would like to position it as the netflix, apple of china. they also make tvs and electric cars. >> something that leeco has been
saying is that it is about having a streamlined user experience that captures the user 24 hours a day. they had been making very good inroads. this really cements its business in the u.s. >> moving forward, we have a dual headquarter strategy and visio is an initial part of our entry into the united states. we intend to over the next three to four years list our business in the u.s. market. david breaking news this : morning, oracle announced they will buy netsuite in a deal valued at $9.3 billion. cory: least surprising acquisition in the history. david: as i understand it, oracle really wanted to move
into the cloud. netsuite is the original cloud company founded by lee ellison. his family owns 45% of the common stock. is that the same story? cory: netsuite is a truly cloud business run by zach nelson. it will be curious when the filings come out to see if there are other bidders. you can see the market has been waiting for some kind of deal to happen and oracle is the most likely acquirer with larry ellison's personal stake in the company. ♪
erik: you are watching "bloomberg best." i'm erik schatzker. there was an avalanche of earnings reports this week with quarterly results and forecasts from several of the world's marquee technology company. facebook, samsung, twitter, and more. here is a round-up of the highlights. >> facebook shares soaring after
hours as much as 8%. as facebook beats on prop it -- profit. monthly and daily active users -- is it as good as it sounds? >> facebook has done a good job of getting the entire world on its platform. it is incredible. if you look at advertisers, they are following where people are. when you look at the actual ads on facebook, what you will see are less brand advertisers and more apps install ads. in terms of trying to reach users all over the world facebook has done an incredible , job. >> the fact that their ad revenue continues to grow at this time is also significant and speaks to the investments they had made in mobile video as well as measurement. i think another interesting note is the activity that brands are now creating around messenger. the fact that brands are willing to create chatline experiences speaks to the fact they see that platform as a potential extension of their brand.
>> alphabet shares gaining after hours. sales excluding some payments to partners rose 22% to more than $17.5 billion. adjusted eps up 20% from a year ago. it is clear that google and facebook from yesterday are gobbling up most of the digital ad dollars. which one is in a better position? >> they are both in strong positions. they both have made the shift as to, what are beginning we call the mobile mind shift, using their phone throughout the day. google is going to be stronger on the broad variety of activities. facebook of course is very involveden people are in social interaction with their graph of friends. both of them are in a position to it extend from a world that is advertising-centric.
>> this was a killer quarter. the third straight quarter for amazon. the question is, can it sustain that through this quarter and next? >> i think third quarter, you will see more of a slowdown. a year ago, fourth quarter, they did miss e-commerce gross margins due to underestimating demand for fulfillment by amazon. i think you are seeing increased investment. they also cited investment in content related to prime video. overall this is now several , quarters in a row of improving margins. >> it seems like the market has become comfortable with that because you have amazon web service going gang buster rate making more of that operating income. >> correct. if you talk to competition there , are other competitors, but there is nobody in the market ite like a product su amazon. it pushes more investment in the e-commerce business, which is
ironic that it does that. electronics rising about 4/10 of 1% after it announced buying back and canceling $1.6 billion worth of shares after that strong earnings report. >> we have been focusing on the smartphone business, which was big with the s seven >>. .>it is the sexiest business apple reporting yesterday 40 million phones. when you look at they reported for the mobile phone business and what they are pricing here it has taken up the mantle of , the biggest profit driver for samsung. have a look at the breakdown here. $3.8 billion for the mobile phone, so that is the galaxy, the hybrid, and the tablets. semiconductors, that is where the margins are. for samsung, they are head and shoulders above everyone else. >> out with its half year results.
40%.ue jumping at first glance revenue growth , accelerating. profits going up 12% in the margins. the thing is about this company, it continues to ramp up r&d. it is so aggressive, isn't it brian? brian: absolutely. these results are not surprising. these are one of the vendors we are expecting to grow from the smartphone space quite significantly this year. the question as you point out, how much does that come at the expense of -- are they spending more on r&d, marketing? they are expecting to be quite aggressive in this space and we do expect more of that. at what cost is the question here? >> turning to twitter, shares plunging in extended trading after the company released earnings down as much as 12%. and the closely watched number of monthly active users edged up. what that be enough to boost and
-- boost ad revenue going forward? will the news get better? >> it is important to remember that user engagement have to lead monetization. it is important to remember that twitter -- all of their latest efforts is in the service of going. while volume is employed that's important, user engagement is more important. if their latest live streaming can capture the market, the quality of those eyeballs are more important. >> what you are seeing is in terms of monetization, cannibalization of their revenue from new products cannibalizing their legacy products. with a lack of user growth, you have to understand, are they trying to be niche or live?s-market with this and at what cost is it going to come? >> phillips second quarter beat estimates. they are keeping its 2016 outlook.
i see from your statement they are concerned about higher risk due to volatility. where in particular worries you at the moment? >> we see basically volatility all over the world. in the middle east, brexit, elections coming up in the united states -- maybe positive is that i see china growth coming back. a we had a good growth quarter in china. but overall, the world is a volatile place and that is just a reality. david pharmaceutical giant eli : lilly posted second-quarter earnings that matched estimates as sales surged. sales went 9% for the quarter. you either met or beat estimates. those of the topline numbers. take us behind those numbers and tell as what we should be looking at here. >> we grew revenue 9%. i think the important piece of that is that 8% of that revenue
was volume. growth, sixolume percentage points were the new products we have launched since 2014. price and rate had a negligible impact on the top line. in addition, we got good growth from some of our existing products, including our rapid acting insulin humalog. jonathan glasgow smithkline up : with earnings that beat estimates driven by new drug sales. the stock is trading higher this morning. we will begin with the brexit effect. i will put a few things together beginning with the impact of a weaker pound. gs k seeing the cable rate around 1.33, adding 9% positive impact on revenue. looking at your guidance for the dividend, expect it remain about 80 pence this year and next. what are you going to use the extra money for?
>> great question. we have seen a tailwind effect from currency. it is dollar, yen, all of our we see the benefit at the top and we get benefit through the structure of the p&l as well. that is very good news from that point of view. you are quite right. it is driving sales. it is driving margin and driving the company in terms of dividend cover. >> volkswagen reported a profit drop of 36% for its biggest unit. that is the volkswagen brand. >> we are seeing the audi and porsche brands are the biggest contributors. volkswagen has seen profit decline 36% in the second quarter. that seems like a big drop. when you consider the extra charges and costs triggered by the diesel scandal, that is still a pretty robust result
considering the really difficult situation that the brand is in at the moment. >> earnings came up short in the second quarter. the automaker is warning that it's profit targets are at risk even though sales of pickups and suvs are surging. ford european sales posted the biggest gains in four years for the brexit could lead to a slump. >> there are a couple of different risks. one, we are seeing lower pricing and higher incentives in the u.s. and china. we are seeing softening in the u.s. of the retail industry. still, at a healthy level, but , overall, as an industry in the second quarter. at the same time, we are also seeing the effects of brexit, particularly of exchange and potentially volume in the u.k., which is our biggest market in europe. r&bjust a weak chinese giving the profile of the
vehicles we imported to the country. finally, we are the lower auction values for small vehicles that released in the u.s. later we will drill into , oil earnings and what they mean for an industry struggling to find its balance. and straight ahead, some of the week's most provocative conversations with leaders in business and politics. tom steyer on the race for the white house. alan greenspan on the fed and more. this is "bloomberg." ♪
♪ ms. clinton: when there are new ceilings, the sky is the limit. [applause] erik: this week, hillary clinton received the democratic party nomination for the u.s. presidency. billionaire investor and climate change activist tom steyer has been a longtime clinton supporter, and a major donor. on monday, he spoke with oberg about the u.s. economy and the democrats' that form. well, i think that the democratic party in 2016 has done a very good job of trying to get to the actual concerns of broad-based american people. a big part of that, and i give
senator sanders a lot of credit for this, is raising the issue about inequality. about the fact that even though the country as a whole has gone forward, the gains from that, the benefits from that have not been distributed fairly or equitably. i think that is something where we are looking at 25 years where working people in america have not had an increase in their wages. i think the democratic party is trying to reach out broadly to americans, and listen to them, understand their concerns and , address those concerns. >> you have put a great deal of capital behind the environmental movement, and support for hillary clinton as an environment of candidate. how do you hope to see that play out? what do you hope to have a clinton presidency do? the if you look at 2016 and platform we have agreed on, it is a quantum leap forward from four years ago.
i think we have the most progressive environmental platform in the history of the demo at a party, or the history of american politics. erik: monetary policy was again in spotlight this week with both the federal reserve and bank of japan making rate announcements. on thursday, the former fed chairman alan greenspan joined bloomberg to offer his perspective on the challenges facing the central bank. >> you said you are starting to see some indicators. what are you looking at that would indicate inflation may be coming back? >> we are beginning to get a pickup in wages beyond the rate of growth. and that is usually the best indicator, but just as importantly now is that since , money at the end of the day is what causes inflation, we have been seeing since the beginning of the year a significant hiccup
in the rate of money supply growth. over the very long run, it is the ratio of money supply divided by the real gdp capacity to produce, which ultimately, determined the price level. it it is a very rough indicator. it does not work for two or three years and then pops up. but over the long run, it has never failed. and we are in a situation now where looking at the interest rate levels, the inflation rates , it is very clear we are going to be moving reasonably shortly and to a totally different phase. erik: meantime economic , stability in europe remains a major concern. britain's brexit vote has added to uncertainty, and turkey's leadership is trying to restore investor confidence. after a failed -- bloomberg spoke exclusively with the turkish prime minister about
the measures his government is taking. >> the coup attempt had an economic impact on the turkish economy. s&p immediately cut our rating. i think that was not an ethical stand. it was taking advantage of the situation. we have overcome a coup attempt. we have struggled to keep democracy running, and these agencies should not be rushing their decision. this was saddening for us. the turkish economy does not deserve this if you look at the indicators. it is an ideological and political decision. we have no doubt about that. what we are saying to global investors is this has come and gone, and the national will and the will of the citizens has destroyed it. life is back to normal in turkey and you can continue long-term investments. we will eliminate obstacles before you. we are laying out the turquoise carpet in front of investors.
we have all kinds of tax incentives, investment incentives, and we are giving priority to value-added investments. >> you mentioned the government would increase investment in the productive sectors rather than investment in social spending, but more on the investment side. are you planning any measures to encourage private investment and foreign investment rather than just foreign investment in bonds and stocks are smart -- bonds and stocks? but also maybe direct for investment into the turkish economy? >> we are establishing a wealth management fund. it is a structure that will finance large-scale projects. the general budget will be cleared of problems. >> the deal with the e.u., do you see a model realistically where the u.k. can get access to the single market? >> i think people at the moment
are jumping to it must be norway or that. i think the u.k. is a unique case. we are the fifth-largest economy in the world. we have a trade deficit with europe, 62 billion pounds. it is not in the interest of the germans for us to impose taxes on cars coming over or on french wines. there is only one country in europe we run a trade surplus with. so, the u.k. is a really powerful engine. we are number one in europe for foreign direct investment. for all of those reasons, it would be very difficult not to do a deal in the best interest of everybody. i will give you one example very quickly. airbus bodies are made in france. avionics in germany. you have to have a free-trade agreement for aerospace. you have to do the same for defense products and automotives. when you break it down category by category, what i think will
♪ erik: you are watching "bloomberg best." i am erik schatzker. oil began the week trading at a three-month low. as energy companies around the world rolled out quarterly earnings, the industry's travails were a steady discussion on bloomberg television. >> earnings plunged for bp, the first major company to report results. profits fell 45% missing estimates. bp is being hurt by lower oil prices. crude's 25%
increase provided prospect of relief. >> there is concern about refining. what does it mean for the sector as a whole? >> what is happening is during the last year the refining , sector was providing too low prices. refiners were making a lot of money. the refining engine is sputtering. for bp, it was the weakest second quarter since 2010 in terms of refining margins. >> how tricky is the chief executive's road ahead? dead rising the oil price rally rising the oil price , rally is seemingly fading. >> there were some positives. the company is freeing up cash. it is hard to see what the catalyst for change is here. oil prices seen in a rut at $50 or below. as you say, they added $6 billion of debt a year.
they will seem to have to keep adding to the debt to keep paying investors. absent a big rally in oil, it does seem like a bit of a slump. >> what caused the decline in prices? down to $42 a barrel where we are this morning. we would argue because the fundamentals are not distinct now, the market is trading off the dollar. >> if you make a picture of the dollar, and will prices, going back to it has been trading in june 1, lockstep. what do we focus on? all the bearish news, and we don't focus on the bullish news. when the dollar pushes oil prices higher, we focus on the bullish news. i can turn around and make a bullish case as well as i can make a bearish case. the passionate bulls in the market have backed away. the passionate bears have backed away which tells you the market and the fundamentals are really not going into any significant direction. >> shall shares slumping,
reported a 72% drop in profit. bloomberg's ryan chilcote is here to break it all down. ryan we already knew oil profits : follow oil prices. we know the oil price fell year on year so it was no surprise , there would be a decline. was thatem that shall their production fell as well. they produced 120,000 barrels less than the market was anticipated. that does not sound like a lot when you are producing a few million barrels. at $50 a barrel, that adds up to $6 million a day. over a 90 day period that is , $540 million. that explain half of the loss. another big business at show is the gas business. don't forget, they are the largest lng producers out there. that, too underperformed. , really bad news at all three of shell's businesses. >> they beat estimates. what is behind that? >> production is up. up by just 5% but that helps on , the margins.
in addition to that they are , cutting costs. that is something investors love. they had a target of $2.4 billion of cost cuts this year and say they will beat that , target. >> all of a sudden, people question oil demand. do they have reason to do that? >> they have an underlying reason. if the world economy is sputtering, oil demand should be sputtering. actually, oil demand has been come on the whole, pretty robust given the global economy. , it is rising more than one million barrels a day annualized. we don't see that dropping very much, even if china sputters even more. china is currently making 2.6 million cars a month. that means gasoline demand has got to go up a good 8% of matter -- 8% no matter what. >> wrapping up a big week for oil earnings, chevron and exxon both missing estimates. chevron a loss of $1 billion.
-- chevron i loss of $1.5 billion. exxon's call is currently underway. what has been the big takeaway so far? >> a big concern about increasing debt. they are concerned about what is going to happen with refining margins in the third quarter. rosol is still positive with $1.7 billion. it is the weakest for exxon mobil since 1999. the time of the merger between exxon and mobil. that is the big takeaway. i think the analysts will be asking questions in exxon mobil , but also for chevron about what is going to be the outlook for them in the second half of the year. both companies at the moment are failing to make enough money from their operations to pay for capex, and investment in new production facilities, and also paying shareholders.
i give you a couple of numbers from the presentation of chevron. the confidence call comes later today. in the first half of the year, chevron spent $14 billion in investment in projects and also paying shareholders. over that same period, the only made $5.1 billion. we see a huge drop in what chevron is able to make and what it is spending. >> as you look at the majors, talk about the reserve replacement ratio. who is managing the cycle currently? >> none. it not a singlnot a single one. we are beginning to see these companies struggling, production coming down, and not one company is presenting an outlook that is convincing for the second half of the year or the next few years going ahead. ♪
♪ >> this is the market implied policy curve. this is what it was the day after brexit. you can see we did not see 50 basis points for a head fund hike until 1.5 years out. >> one of the charts you looked at in your work is the relative rotation of different sectors. health care is in the leading sector, the upper right-hand quadrant. tech is improving as well. that is the blue line right here. erik: there are about 30,000 functions on the bloomberg, but we always enjoy you showing our favorites on bloomberg. maybe they will become your favorites. here is another function you will find useful. it will take you to our quick takes where you can get , important context and fast insight on timely topics. here is a quick take from this week.
>> there are five major energy sources in the world right now. petroleum, natural gas, coal, renewable energy, and nuclear power. thanks to the u.s. shale and cracking boom and the fact it is , cheap, plentiful, and clean, it is natural gas that may be the future. big oil companies are using technology that turned into liquefied natural gas, or lng, the commodity that can be shipped all over the world, the shaping the politics of global energy. here is the situation. the trickiest problem with natural gas right now is in the name. it is a gas. most gas travels through pipelines. that makes it fairly difficult if the u.s. wants to sell gas to korea. but a few things make shipping natural gas possible. is the process of cooling it to -260 degrees fahrenheit converting it to a liquid, and
, reducing its volume by about 600 times. it is like going from a beach ball to a ping-pong ball. this makes it possible to transport gas on really big ships which leads us to a fleet , of $250 million tankers, some the size of almost four american football fields that can carry lng all over the world. the only problem is these ships are too big to fit through the panama canal -- until now. the $5 billion panama canal at engine was finally finished in june allowing for faster 2016, shipping to key markets like asia. what does this mean for global energy? well a growing number of , countries are trading it with 34 nations importing it by the end of 2014 compared to just 15 in 2005. here is the argument. overall, demand depends on how fast countries will turn away from coal, the largest source of power generation in the world. one lng selling point is that it
is cleaner, producing about half as much carbon dioxide as coal. oil companies are pushing into it for a greener future. shell's acquisition of bg group made the dutch giant the world's largest lng trader. but not everyone is a bore the lng train -- not everyone is a board the lng train. countries like japan, the largest importer in the world, is focused on nuclear power after starting to get reactors back up and running after shutdowns prompted by the 2011 tsunami. plus, some u.s. gas utilities are opposed to long-term exports of lng, saying, longer-term, it could raise gas prices for american consumers. ♪ erik: you can find a wide selection of it takes on the bloomberg. you can also find them at bloomberg.com along with all the latest business news and analysis 24 hours a day. that will be all for "bloomberg best" this week. thanks for watching.